The long-term goal of this project is a detailed understanding of the cellular and molecular mechanisms that control the development of the adult peripheral nervous system (PNS) of the fruit fly Drosophila. This system has proven to be a particularly accessible and productive setting in which to investigate fundamental problems in animal development, including pattern formation, cell fate specification, and differentiation. Cell-cell signaling via the Notch (N) receptor is a principle mechanism for assigning cell fates in a broad variety of developmental processes in metazoans, including neurogenesis. We have identified a novel family of seven genes that are not only known or likely targets of transcriptional activation by the N pathway, but also encode small proteins that are potent modulators of N signaling activity. Since these predicted proteins have in common a strongly basic amphipathic alpha-helical domain, like the product of the founding member, Bearded, we refer to this gene set as the Bearded (Brd) family. The research plan outlined in this application makes use of a combination of classical and molecular genetics, cell biology, and biochemistry to elucidate the function and regulation of this new group of genes: (1) Genetic analysis of Brd family gene function. (2) Molecular genetic analysis of Brd family transcriptional regulation. (3) Cell biological and biochemical analysis of the expression and function of Brd family proteins. By focusing on a key cell fate specification system, this research project offers the prospect of significant advances in our mechanistic understanding of development regulation at the cellular and biochemical levels.